More information has emerged to demonstrate the implications on the London property market, as per the decision to leave the European Union on June 23rd, 2016.
The UK Prime Minister has invoked Article 50, allowing the UK to be the first country to trigger an exit from the European Union, with negotiations set to take place over the next couple of years.
Considering last year’s referendum result, the London property market has stabilized and many investors are now going back to buying up property in London with the long-term view in mind.
Knight Frank are forecasting solid growth over the next five years as analysts roll back their earlier predictions of having to relocate large swathes of people to mainland Europe.
We are finding buyers from China and Malaysia are drawn to British property investments, and as a provider of such assets, FJP Investment is already seeing the benefits with more investors calling in from abroad.
The very next day, the day after the referendum result was announced and the pound came spiralling down, we noticed a surge in traffic to the website and an increase in buyers from our international markets.
Initially this was about education and curiosity, buyers wanted to know what all of this means for them and their investments in the UK. As time has progressed, investors have found themselves with an opportunity that is too good to pass up.
Over the months since the result was in, interest has increased month-on-month. This is in no part thanks to the sudden realization that everything is going to be just fine.
The buyer’s appetite has increased and the approach has changed with international buyers thinking of a longer-term strategy as opposed to buying and flipping in shorter periods of time.
As an example, the percentage of Asian buyers of property investments from FJP Investment, increased from 13% to 21% from April 2016 to April 2017.
Long term approach is the name of the game, the short-term hiccup provides for an opportunity to see an increase in gains.
While overall investment volume has fallen in the UK from China, the property sector has seen an increase from $2.2 billion in 2016, which is up from $1.8 billion in 2015. Investors are simply diversifying from other assets and the property sector is a large beneficiary of this investment capital.
London is beset by issues such as a lack of new property available for sale along with a slowdown in new housing projects. The mayor of London made a pledge that 50% of new London housing developments, will be “affordable”. Property developers have come to realise that this is not feasible and have grown wary of such eventuality.
With tougher immigration laws, there is likely to be a drop bricklayers, labourers and carpenters coming in from the European Union, this will no doubt push development costs higher in terms of construction.
There is no reason to believe that the pound will rise in value in the next two years, though there is every expectation that the pound will strengthen after the UK has officially left.
Given the prolonged difficulties for the Euro as a currency, it is expected that in the medium term the Pound will strengthen.
This therefore creates a 2-year window to buy into the London property market while prices are steady and the currency is in favour of international investors.
London is very much a hot destination for inflows of money from Asia, with Brexit, a whole new opportunity has opened.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas. Recently launched opportunities include the Pegasus Agriculture Investment.